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March 4, 1997updated 05 Sep 2016 1:08pm

MICROSOFT’S MULTI-HEADED HYDRA LIKELY TO STRANGLE CITRIX

By CBR Staff Writer

Microsoft Corp is developing a multi-user version of Windows NT under a project aptly code named Hydra, after the mythical nine-headed serpent of classical antiquity. Work on the project has reportedly been advancing in earnest since NT 4.0, the current version of the operating system, went gold last August. Prior to beginning serious coding, Microsoft spent months sorting out the design. Sources close to the company say Hydra can already be demonstrated, though few outside Redmond have seen it. Microsoft’s design includes both a full multiuser NT kernel and a thin-display protocol that it reportedly nabbed from Intel Corp. That protocol is currently said to run on a Windows CE box, using Microsoft’s cut-down 32-bit NT/95-derived browser-based operating system for $500 PDAs, NCs, hand-helds and embedded devices once known as Pegasus. It is thought that there may be a place for third parties to add an X protocol as well but little else. Sources reckon a multiuser rev will see the light of day in an edition called NT ‘5 1/2’ – meaning the one that follows the next major revision of the operating system, NT 5.0, which is supposed to go to manufacturing in the first quarter of next year. NT 5 1/2 is supposedly penciled in for the third quarter of 1998 but, given Microsoft’s history of slippages, neither NT 5.0 nor the so-called 5 1/2 are considered likely to hit their dates so the best guess for 5 1/2 is 1999. Microsoft’s sudden interest in making NT multiuser, a chore it previously farmed out to third parties like Citrix Systems and Groupe Prologue, revolves around the threat posed by NCs, thin clients and total cost of ownership. Given that these threats could be lethal to Microsoft, observers doubt that it will use any of the multiuser technology developed by either Citrix or Groupe Prologue. Both companies have a source code license to NT from Microsoft and both have made substantial changes to the operating system and the operating system’s kernel – so much so that some Windows applications reportedly break. Groupe Prologue, a French concern, has made little impact on the market but Citrix, a Florida company with an IBM and OS/2 background, has been something of a Wall Street high-flyer until it crashed last week on word Microsoft might do its own multiuser version of NT.

THE SECRET OF SUCCESS

Citrix’ business was given momentum by the thin client craze, the absence of workable Java applications and devices and the market’s very real concern about the real cost of owning Wintel machines. Because it could run Windows apps – which is what everybody wanted anyway – Citrix technology was licensed by Tektronix, Wyse Technology, Insignia Solutions, CompuServe, Boundless Technologies, Telxon, Canada’s Transphone LLC, Psion Software PLC, Triteal, Motorola and Sun Microsystems. IBM and Data General have made arrangements to resell it.

Given the strong likelihood that Microsoft, on a not-invented-here bender, will snub Citrix’ technology in favor of its own. The two are said to be in cross-licensing discussions, but Microsoft is believed to own any NT work Citrix might have done anyway. Citrix is going to have to do some tall explaining to its shareholders as to how it allowed itself to get into the predicament it’s in.

Citrix’ window of opportunity was always short-term. Eventually Microsoft would bring multiuser back home. Citrix knew that. Others in the thinly populated world in which Citrix was playing claim to have known for months that Microsoft had embarked on the Hydra project and claim Citrix had known too, however informally. Given Microsoft’s predatory reputation, Citrix – despite the $150 million it has in the bank – has made no move to shore up its position with acquisitions, heightened R&D or branching off into new technical areas. Meanwhile, insiders appear to have reduced their own stock positions in the company substantially over recent months. Citrix is also considerably behind in bringing out its NT 4.0 technology and has so far failed to negotiate a 4.0 license from Microsoft. Sources say these 4.0 negotiations are long-standing and it was during 4.0 discussions last week that Microsoft lowered the boom and formally notified Citrix that it was doing Hydra. Citrix’ stock, which had been in the 50s in December and January crashed into the $10 cellar on word of Microsoft’s intentions. It is believed Citrix has been difficult about 4.0 pricing. Under its NT 3.51 license, sources say it has been paying Microsoft only a few hundred bucks per server while charging hefty prices per user. Microsoft, it claims, didn’t want to leave all that money on the table and Bill Gates himself publicly observed back in November that Citrix’ costs defeated the economics of NCs. Citrix has also said that its ICA protocol technology, which it describes as the bulk of its assets, is not currently part of any licensing negotiations that may be going on with Microsoft – apparently because Redmond already has rights to embed ICA in NT and Windows 95 – and presumably the Hydra protocol Microsoft is supposed to have from Intel is a lot more efficient in high-bandwidth environments than ICA can pretend to be so it’s doubtful ICA will continue to have much value much longer.

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